The California Department of Financial Protection and Innovation (DFPI) has announced a consent order against Coinme, Inc., marking the first enforcement action under the Digital Financial Assets Law (DFAL) in California.
Overview of Coinme's Violations
Coinme, which operates crypto kiosks in grocery and convenience stores across California, was found to have violated DFAL’s daily transaction limit by allowing customers to exchange or withdraw more than $1,000 per day. The DFPI investigation also revealed that Coinme failed to provide required disclosures on customer receipts.
Impact on Seniors
Under the terms of the consent order, Coinme has agreed to pay a $300,000 penalty, including $51,700 in restitution to an elderly California resident impacted by the violations. DFPI Commissioner KC Mohseni stated that this enforcement action should send a strong message to kiosk operators that California requires digital asset companies to follow the rules that protect unsuspecting citizens.
Legislative Actions in Other States
According to the Federal Trade Commission (FTC), fraud losses linked to crypto kiosks surged nearly tenfold between 2020 and 2023. Other states, such as Illinois and Vermont, are also taking measures to limit losses by imposing transaction limits and requiring crypto ATM operators to obtain licenses.
The information provided highlights the need for stringent regulation of crypto kiosks, especially given the rise in fraud within this market. Legislative initiatives may help to protect vulnerable populations, such as seniors.
